Clipping online coupons may seem passé in the West, but Chinese shoppers remain dead keen. They spent 77 billion yuan ($12.1 billion) through group-buying websites in the first half of this year. Meituan, part-owned by Alibaba, a goliath of eCommerce, commands roughly half of the local market; Dianping, a listings-and-reviews site in which Tencent, a gaming and social-media giant, has a stake, has about 30%. The two are thought to be about to unveil a merger that will create a firm worth around $15 billion.
That will be a blow to Baidu, China’s biggest online-search firm, which is already an also-ran in this business. More consolidation looks likely. This year nearly $60 billion has been poured into Chinese internet companies, with the big beasts among them being the most enthusiastic spenders. The country has too many unprofitable firms in many online niches. Expect more to be shaken out.
First Appeared on The Economist Espresso.